What is a Commercial Property Inspection?
A commercial property inspection evaluates the property’s true value, state, and necessary repairs. It’s traditionally carried out at the request of portfolio managers, who own and offer a wide range of similar assets for financial gain.
Who Will Conduct Commercial Property Inspection?
The first step to running a successful commercial property or facility evaluation is selecting a capable inspector to carry out the process on your behalf. There are two main groups between which management teams tend to choose:
Engineers / Architects
Their value lies in being closely acquainted with the necessary structures and utilities. Engineers and architects have a keen eye for finding potential issues ahead of time and can provide the best, most actionable insights.
However, due to their seniority in the field, they sometimes charge a premium for their services. Combined with all other associated costs, this can make them unaffordable for smaller commercial property management firms.
Property Inspectors
These can usually be sourced from companies specializing in inspectors and often offer both residential and commercial evaluations.
Property inspectors tend to be a little cheaper, but it’s best to look for a provider with a lot of experience in commercial inspections, as they’re quite unlike residential ones.
Regardless of who you choose to run your inspection, you should make sure they understand the fact that commercial properties are an asset that is both an expense and income generator.
Thus, they should be able to give you a clear and honest opinion on whether a specific real estate item is worth the money.
The Process of Conducting a Commercial Property Inspection in Malaysia
It is important to take into account any specific regulations, building codes, and cultural factors that may apply to commercial properties in Malaysia. Here are some general guidelines for conducting a commercial property inspection in Malaysia:
Plan and prepare
Determine the purpose, scope, and objectives of the inspection. Coordinate with the property owner, property manager, or other relevant parties to schedule the inspection and gather necessary documents, such as building plans, permits, maintenance records, and tenant leases. Familiarize yourself with the local regulations, building codes, and standards that may apply to commercial properties in Malaysia.
Conduct a visual inspection
Visit the property and conduct a visual inspection of the exterior and interior areas, including the roof, walls, windows, doors, foundation, parking lot, landscaping, common areas, mechanical and electrical systems, plumbing, HVAC, fire protection systems, and other relevant components. Take notes, measurements, and photographs or videos to document the condition and any issues observed.
Review documentation
Review the available documentation, such as building plans, permits, maintenance records, tenant leases, and other relevant documents, to gather additional information about the property's history, maintenance, and potential issues. Ensure that the property has obtained the necessary permits and approvals from the local authorities in Malaysia.
Test and inspect systems
Conduct tests and inspections of relevant systems, such as electrical, plumbing, HVAC, fire protection, elevators, and other equipment, as applicable. This may involve using specialized tools or equipment, or engaging qualified professionals, such as engineers or technicians, to assess the condition and performance of these systems. Ensure that the systems are in compliance with local regulations and standards.
Evaluate property condition
Evaluate the overall condition of the property, taking into consideration the findings from the visual inspection, documentation review, and system tests. Identify any potential issues, risks, or deficiencies that may affect the property's value, safety, compliance with regulations, or performance. Consider the local climate, weather conditions, and other environmental factors that may impact the property's condition.
Prepare a report
Prepare a detailed inspection report that summarizes the findings, including observations, measurements, photographs or videos, and recommendations for further evaluation, repairs, or maintenance. The report should be clear, concise, and organized, and may be used as a reference for decision-making, negotiation, or further due diligence. Ensure that the report is written in a language that is understood by all relevant parties, as Malaysia has a diverse population with multiple languages spoken.
Follow up and verify
Follow up with the property owner, property manager, or other relevant parties to verify any issues identified during the inspection, and ensure that the necessary repairs or maintenance have been completed as per the recommendations in the inspection report. Ensure that any necessary permits or approvals from the local authorities have been obtained for any repairs or modifications made to the property.
Why Commercial Property Inspection is Important for Investors
Commercial property inspection is essential for investors as it helps to mitigate risks and make informed decisions. Here are some key reasons why commercial property inspection is important for investors:
Identifying potential issues
Commercial property inspections can help investors identify potential issues, risks, or deficiencies that may affect the property's value, safety, compliance with regulations, or performance. This includes identifying structural issues, mechanical or electrical system problems, environmental concerns, or code violations that may require repairs, upgrades, or further evaluation. Identifying these issues early on can help investors make informed decisions about the property's investment potential and assess the costs and risks associated with the property.
Assessing property condition
Commercial property inspections provide investors with a comprehensive assessment of the property's overall condition. This includes evaluating the property's physical condition, including the building structure, systems, and components, as well as evaluating its compliance with local regulations, building codes, and standards. Understanding the property's condition can help investors determine its current and potential future value, estimate maintenance and repair costs, and assess the property's performance and income-generating potential.
Negotiating purchase price and terms
Commercial property inspections can provide valuable information that may be used in negotiations with the seller. If issues or deficiencies are identified during the inspection, investors may use this information to negotiate a lower purchase price, request repairs or upgrades, or adjust other terms of the purchase agreement. This can help investors protect their investment and ensure that they are making a sound financial decision.
Planning for future repairs and maintenance
Commercial properties require ongoing repairs and maintenance to ensure their optimal performance and to protect the investment. Commercial property inspections can help investors understand the immediate and long-term repair and maintenance needs of the property, including identifying potential deferred maintenance or capital improvement projects. This information can be used to develop a proactive maintenance plan and budget, which can help investors plan for the costs associated with property ownership and management.
Managing risks
Commercial property inspections can help investors manage risks associated with property ownership. By identifying potential issues, risks, or deficiencies, investors can take appropriate measures to mitigate these risks and protect their investment. This may include addressing safety hazards, environmental concerns, compliance issues, or potential legal liabilities. Proper risk management can help investors avoid costly surprises and protect their investment in the long run.
In summary, commercial property inspection is important for investors as it helps to identify potential issues, assess property condition, negotiate purchase terms, plan for future repairs and maintenance, and manage risks. A thorough and professional inspection can provide investors with valuable information that can inform their investment decisions, protect their investment, and ensure the overall success of their commercial property investment.
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